assguation of can medical colleges agenda€¦ · the washington hilton hotel, washington, dc...

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ASSGUATION OFCAN

MEDICAL COLLEGES

AGENDA

COUNCIL OF TEACHING HOSPITALS ADMINISTRATIVE BOARD MEETING

June 15, 1989

7:30a -12:30p

Washington Hilton Hotel

Map Room

1989 COTH ADMINISTRATIVE BOARD

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Chair: Gary GambutiSt. Luke's-Roosevelt Hospital Center

Chair-Elect: Raymond G. Schultze, MDUCLA Medical Center

Immediate Past Chair: J. Robert Buchanan, MDMassachusetts General Hospital

Secretary: John E. IvesSt. Luke's Episcopal Hospital

Calvin BlandSt. Christopher's Hospital for Children

Jerome H. Grossman, MDNew England Medical Center, Inc.

Leo M. Henikoff, MDRush-Presbyterian-St. Luke's Medical Center

William H. Johnson, Jr.University of New Mexico Hospital

Sister Sheila LyneMercy Hospital & Medical Center

James J. Mongan, MDTruman Medical Center

Robert H. MuilenburgUniversity of Washington Hospitals

Max PollBarnes Hospital

C. Edward SchwartzHospital of the University of Pennsylvania

Barbara A. SmallVeterans Administration, Durham

Alexander H. WilliamsAHA Representative

COTH MEETING DATES

COTH 1989 ADMINISTRATIVE BOARD MEETINGS

June 14-15- The Washington Hilton Hotel, Washington, DCSeptember 27-28- Same

COTH SPRING MEETINGS

May 9-11, 1990The Lafayette Hotel, Boston, MA

AAMC ANNUAL MEETINGS

October 28-November 2, 1989The Washington Hilton Hotel, Washington, DC

October 20-25, 1990The San Francisco Hilton Hotel, San Francisco, CA

November 8-14, 1991The Washington Hilton Hotel, Washington, DC

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ASKZIATION OF ONE DUPONT CIRCLE, NWAMERICAN WASHINGTON, 1,M 20036MEDICAL COLlEGES TELEPHONE (200828.0400

MEETING SCHEDULE

COUNCIL OF TEACHING HOSPITALS

ADMINISTRATIVE BOARD

June 14-15, 1989

Washington Hilton Hotel

Washington, DC

WEDNESDAY, June 14, 1989

6:00p JOINT ADMINISTRATIVE BOARDS SESSION

Guest Speaker: Harvey Barkun, MD

Executive Director, Association of

Canadian Medical Colleges

Jefferson West Room

7:00p COTH ADMINISTRATIVE BOARD RECEPTION/DINNER

Jefferson East Room

THURSDAY, June 15, 1989

7:30a COTH ADMINISTRATIVE BOARD BREAKFAST MEETING

Guest Speaker: John A. Gronvall, MD

Chief Medical Director, Veterans

Administration Central Office

Map Room

12:30p

1:30p

JOINT ADMINISTRATIVE BOARDS LUNCHEON

Cabinet Room

EXECUTIVE COUNCIL BUSINESS MEETING

Military Room

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I.

COTH ADMINISTRATIVE BOARD MEETING

June 15, 19897:30a-12:30p

Map RoomWashington Hilton Hotel

Washington, DC

CALL TO ORDER

OFFICERS AND STAFF REPORTS

John A. Gronvall, MDChief MedicalDirector, VACO

A. AAMC President's Report Dr. Petersdorf

B. COTH Chairman's Report Mr. GambutiC. Division of Clinical Dr. Bentley

Services, Report

IV.

V.

CONSIDERATION OF MINUTES

ACTION ITEMS

A. COTH Spring Meeting

• Evaluation of Format Changesfor COTH Spring Meeting

o Preferences for 1991/1992

COTH Spring Meeting Sites

• Followup to Breakout Sessions

1989 COTH Spring Meeting

B. September Board Meeting Speaker

C. AAU Report on Indirect Costs

DISCUSSION ITEMS

A. AAMC Positions on Public Policy

Issues

Continued...

Page 1

Page 8

Page 9

Page 12

Page 15

Dr. ShermanExecutive Council

Agenda - Page 23

Executive Council

Agenda - Page 24

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B. Conflict of Interest Executive Council

Agenda - Page 68

C. A Single Examination for Dr. Kassebaum

Medical Licensure Executive Council

Agenda - Page 26

D. APHIS Proposed Animal Executive Council

Welfare Regulations Agenda - Page 70

VI. INFORMATION ITEMS

A. 1989 Annual Meeting Page 16

COTH Session Program

B. PINK MEMO: urinal Comments on Page 17

Medicare Proposed Rules on Payment

for Physician Services Furnished

in Teaching Settings”(#89-27)

C. BLUE MEMO: "Proposed Medicare Page 20

PPS Regulations" (#89-38)

D. Letter to MIME Representative Page 24

VII. ADJOURNMENT



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ASSOCIATION OF AMERICAN MEDICAL COLLEGES

COTH ADMINISTRATIVE BOARD MEETING

February 23, 1989

PRESENT

Calvin Bland

Gary GambutiLeo M. Henikoff, MD

John E. Ives

Sister Sheila Lyne

James J. Mongan, MD

Robert H. Muilenburg

Max PollRaymond G. Schultze, MD

C. Edward Schwartz

Alexander H. Williams

ABSENT

J. Robert Buchanan, MD

Jerome H. Grossman, MD

William H. Johnson, Jr.

Barbara A. Small

GUEST

Bruce Steinwald

STAFF

James D. Bentley, PhD

Janet Bickel

Joanna Chusid

Linda E. Fishman

P. Ridgway Gilmer, MD

Robert E. Jones, PhD

Joyce V. Kelly, PhD

Richard M. Knapp, PhD

Herbert W. Nickens, MD

Robert G. Petersdorf, MD

Kathleen S. Turner

Melissa H. Wubbold

Stephen C. Zimmermann

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COTH ADMINISTRATIVE BOARDMEETING MINUTES

Washington Hilton HotelFebruary 23, 1989

I. CALL TO ORDER

Gary Gambuti called the meeting to order at 7:30a in the State Roomof the Washington Hilton Hotel. He welcomed the Administrative

Board and introduced the morning's guest speaker, Bruce Steinwald,Deputy Director of the Prospective Payment Assessment Commission(ProPAC).

Mx. Steinwald gave a brief history of the Commission, how it isstaffed, and of whom its membership is comprised. Additionally,he also reviewed the Commission's charge and gave a brief overviewof the prospective payment system (PPS) payment formula as shownin the handout included in these minutes as Attachment A.

Much of Mr. Steinwald's presentation dealt with the

Administration's proposed reduction in the indirect medical

education adjustment from the current 7.7% (at a .10 resident tobed ratio) level to 4.4%. ProPAC analysis of PPS3 cost data showswith such a reduction, the incremeutal Medicare costs of servinga large fraction of low-income patients would be covered by the

disproportionate share adjustment. Implementation of the reductionwould redistribute PPS payments, however, with substantial revenue

losses •for major teaching hospitals. These institutions tend tohave relatively high PPS margins but tend to demonstrate low

overall margins at 50% under other averages.

After careful consideration and review of appropriate data from the

AAMC and American Hospital Association, ProPAC recommends that a

reduction to 4.4% is too abrupt a change and is supporting a budget

neutral reduction to 6.6%, the savings from which should be

returned to the base for all hospitals. Additionally, the

Commission recommends that changes in future years should be based

on further analysis of improved data. Mr. Steinwald noted that

realistic assessment of the current demands cannot be optimally met

using 1984 data, and that attention needs to be given to the

teaching commitment, suggesting that perhaps the resident/intern

to bed ratio is not the optimal formula.

He concluded his presentation by stating that it was unlikely the

Administration would accept ProPAC's recommendations as they stood

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and that the 6.6% budget neutral figure was not a likely outcomeof the reconciliation process. However, he doubted that theopposite extreme of 4.05% would be passed, and that informedlobbying and an updated and improved information base would effecta compromise in this figure.

Mr. Gambuti thanked Mr. Steinwald for his efforts. Dr. Mongan, amember of the Commission, also thanked Mr. Steinwald, complimentingthe high quality and performance of the ProPAC staff, and summedup the primary obstacles he believes the industry is facing withthis issue: 1/ the national deficit; 2/ previous large teachinghospital profit margins still looming large in the Administration'smind; 3/ current high relative margins for teaching hospitals; and4/ the "black box" regression formula. Dr. Mongan felt that theregression formula is currently surrounded by a mysticism thatneeds to be defused, and that teaching hospitals are becoming toovulnerable in their concentration on the IME and should seek otherelements such as the outlier pool and updating the urban wage indexon which to focus.

PRESIDENT'S REPORT

Dr. Petersdorf thanked Mr. Steinwald for his participation andindicated that he believed AAMC/COTH should take a stand on the IMEissue, and continue to support the position of no further budgetarycuts to the Medicare system.

He then welcomed new COTH Administrative Board members, CalvinBland of St. Christopher's Hospital for Children, Philadelphia;Sister Sheila Lyne of Mercy Hospital and Medical Center, Chicago;and Rob Muilenburg, University of Washington Hospitals, Seattle.He followed with a brief summary of the Governance and StructureCommittee meeting the previous day, and identified members of thatcommittee as John Colloton, University of Iowa Hospitals andClinics, Chair; Richard Janeway, MD, Bowman Gray School ofMedicine; Robert Heyssel, MD, The Johns Hopkins Health System;Edward Stemmler, MD, University of Pennsylvania Medical Center; andVirginia Weldon, MD, Washington University School of Medicine.The Committee is charged with reviewing the current governancestructure of the Association with particular attention to suchissues as Council membership, changing the Association's name, andthe role of housestaff in the AAMC. In his review of the ExecutiveCommittee meeting, also on the 23rd, he referenced the strategicplanning document that set forth the AAMC mission statement,strategic goals, legislative objectives, and proposed activitiesfor the Association. This document was mailed with the councilagendas prior to the meetings. Dr. Petersdorf noted that the AAMC

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anticipates closing on a new building site at 24th and N Streets,

NW, Washington, in the near future with a moving date targeted for

early 1991. Lastly, he briefly recounted the AAMC/AAHC Forum

proceedings from the previous afternoon. He noted that the Group

on Faculty Practice was a topic raised, but discussion was diluted

by the results of an AAHC survey showing that the majority of

university practice plans were responsible to the dean of the

medical school. He described the meeting as good, candid, and

nonadversarial.

Dr. Petersdorf concluded his remarks by encouraging the Council of

Teaching Hospitals to be comfortable within the AAMC, advocating

interaction between segments of the Association through meetings

and other activities toward the good of academic medicine.

ACTION:

CONSIDERATION OF THE MINUTES

It was moved, seconded, and carried to

approve the minutes from the November 14,

1988 COTH Administrative Board Meeting in

full.

IV. CHAIRMAN'S REPORT

Mr. Gambuti also welcomed the new board members and gave a brief

overview of the AAMC structure, describing the three Councils and

the Organization of Student Representatives. He described the

Council of Teaching Hospitals as an advisory body to the AAMC

Executive Council, the Association's Advisory Board, and noted that

the COTH Administrative Board had four representatives to that

Council in the chair, chair-elect, immediate past chair, and a

member-at-large.

He then asked each board member to introduce themselves and

describe their institution. This roundtable exchange gave rise to

discussion of the Medicaid crisis including unreasonable rates of

reimbursement and unrealistic eligibility criteria. The program

was described as a "systemic problem" that is finally being brought

to the attention of the federal government as being, in fact, a

long-term care program for the chronically ill.

The financial problem was perceived as being bigger than Medicaid,

however, with the ever growing number of the uninsured poor. The

majority of these individuals are working; the large number of new

jobs being touted by the Administration over the last 8 years has

greatly increased the number of working uninsured.

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V. DISCUSSION OF PROPOSED MEDICARE URBAN-RURAL DIFFERENTIAL

Dr. Bentley gave a synopsis of the AAMC/AHA tiered rate discussionon the proposed Medicare urban-rural differential. This discussionis referenced in his correspondence with Carol McCarthy, President,American Hospital Association, and appears in the February 23 COTHAdministrative Board Agenda. The AAMC at this time continues tosupport the tiered rate (large/urban, urban/rural) approach untiladequate adjustments for non-labor costs and severity areavailable.

He noted the three legislative issues currently of most concern tothe Association are: 1/the tiered rate approach to the urban-ruraldifferential; 2/ any reduction in the 7.7% IME adjustment; and 3/continued inclusion of the disproportionate share adjustment inPPS. These and other lesser priorities are included in theFebruary 23 agenda.

Mr. Williams added his support of AHA/AAMC relations on theseissues and praises the efforts these issues have generated on bothfronts.

Discussion of these legislative issues prompted Dr. Knapp toencourage Board and Council members to make a point of visiting anappropriate contact on the Hill every time they are in Washington.It is crucial to keep the Congress and their staff updated on theissues and though this type of push has not traditionally been inkeeping with AAMC activities, the time has come to make thiseffort.

Enthusiastic discussion on the possibilities ensued and Mr. Blandnoted that this type of activity is historically part of theNational Association of Children's Hospitals and RelatedInstitutions' (NACHRI) annual meeting; Mr. Muilenburg suggestedthese visits become a block of scheduled and committed time onfuture Administrative Board agendas, and Mr. Gambuti proposed thatthese visits be instituted at either the June or Septembermeetings. Mr. Williams suggested inviting respective members ofCongress to homeplate institutions.

The legislative topic was concluded with deliberation on thefundamental issues at the root of problems being faced by thehealthcare industry today. Mr. Muilenburg raised the issue offacing the responsibility for the immense expenses incurred inmassive technology acquisition and where these expenses lead; Dr.Schultze concurred, raising the conflict between NIH research anddevelopment versus the implementation cost of and payment for a

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clinical procedure. He suggested that COTH/AAMC provide someleadership in addressing these paradoxes in an effort to avoidfacing the same problems in perpetuity. Dr. Knapp submitted thatthese solutions should come from Congress, and the AAMC is mostprobably not the organization to address these incongruities. Mr.Schwartz cautioned against taking on nonsequiturs and trying tolink unrelated issues.

Mr. Gambuti suggested that perhaps this was something to beaddressed in the Association's strategic plan and summed up themajor points of the discussion, those being 1/ support of AAMCposition on prevailing legislative issues; 2/ congressional visits;3/ need to focus and put strengths behind immediate issues.

VI. AIDS COMMITTEE REPORT

The Board complimented AAMC staff on the content and sensitivityof this report.

ACTION: It was moved, seconded, and carried toapprove Committee recommendations andimplementation plan as outlined in theExecutive Council agenda.

VII. AAMC FRAMEWORK DOCUMENT FOR INSTITUTIONAL POLICIES ANDPROCEDURES TO DEAL WITH MISCONDUCT IN SCIENCE

This was described as a multi-organizational document created inorder to develop guidelines for the industry before mandatoryregulations are put in place. This document notes that the focusis changing from outright fraud in research to conflict of interestissues. It is directed primarily at those institutions which haveno current guidelines in place, guidelines being difficult toimplement after the fact.

ACTION: It was moved, seconded, and carried toapprove the recommendation provided in theExecutive Council agenda for review andrevision of the document for distribution

to AAMC constituency.

VIII. ETHICS IN PATIENT REFERRAL ACT

Mr. Gambuti raised the question of whether the Association shouldtake an out front position on the issue, or be one of "part of the

chorus." Dr. Schultze felt that this act was primarily aimed athealth care institutions and centers rather than private groups,

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and that the AAMC should be at the front of the chorus. Mr.Williams noted that the American Medical Association (AMA) isheavily involved with this issue, and advised paying closeattention to testimony and development of bills to avoid thepassing of legislation unfavorable to teaching hospitals.

It was agreed to follow the course of this legislation closely, andto be involved in the process as is appropriate.

IX. RECOMMENDATIONS FOR THE FORMAT AND CONTENT OFTHE 1991 MCAT

After a brief review of the MCAT Committee charges and revisionrecommendations, the Board took the following action.

ACTION: It was moved, seconded, and carried to supportthe proposed action as presented in theFebruary 23 Executive Council agenda, approvingthe recommendations of the MCAT EvaluationPanel and Advisory Committee.

X. GROUP ON FACULTY PRACTICE RULES AND REGULATIONS

In keeping with GFP recommendation for approval of these rules andregulations, the Board took the following action.

ACTION: It was moved, seconded, and carried torecommend Executive Council approval for saidrules and regulations.

XI. DISCUSSION OF AAMC AD HOC COMMITTEE ON NURSING AND THETEACHING HOSPITAL

Dr. Bentley described the makeup of the committee and distributeda list of members, included in these minutes as Attachment B. Henoted that the Committee is chaired by Dr. Grossman and includesCOTH CEOs James Block, Ed Howell, and Administrative Board member,Max Poll. The Committee examined the nursing situation at theirrespective institutions in an attempt to identify the specificcharacteristics of teaching hospitals which contribute to problemsin nurse staffing. These include the annual turnover ofhousestaff, the larger number of attending and consultingphysicians, the specialized and intense nature of patient careunits, and the ethical issues raised by critically ill patients.He believed the meeting had been productive, and though thenursing issue is being well investigated by a number of otherorganizations, the committee felt that specific attention needs to

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be paid to nursing issues in the academic setting. An issue paper

exploring the reasonableness of the nursing workload, alternative

structures for nursing roles, and relationships between hospital

nursing services and nursing education programs is being developed

by the Division.

XI. STAFF REPORT

Jim Bentley opened his quarterly staff report by distributing

copies of the final program for the 1989 COTH Spring Meeting in San

Diego. He noted that staff had been able to obtain space for a

Saturday morning session and had reprogrammed the meeting as the

Board had recommended in November. With the program organized to

include two breakout sessions, Board members were asked to

volunteer to serve as discussion leaders.

In reporting on staff activities, Jim Bentley noted the AAMC

Directory had been revised, as requested by the Administrative

Board, to include COTH members and the five senior executive for

each institution. Unfortunately, the current format for the

Directory is difficult to read, but the next edition, scheduled for

publication in the fall, will feature a revised format for easier

use. He also noted the COTH Report is being revised as a result

of a readership survey, the report of the annual Executive Salary

Survey is presently being mailed, and that over 100 hospitals have

agreed to participate in the Survey of Academic Medical Center

Hospitals Financial and Operating Data. The presentation concluded

with a brief review of the November 30 meeting of the Commonwealth

Fund Project's advisory committee. Three staff papers are in

progress: teaching hospital profits, variations in per resident

costs, and the characteristics of high cost cases. Additional

papers are planned on technology and reimbursement and the indirect

medical education adjustment. Three fundamental observations made

by staff on the project are: 1/ much of the public data on key AAMC

issues is a mess, 2/ the AAMC must collect original data on key

issues, and 3/ it is not economical to acquire and analyze data for

a single use.

XII. ADJOURNMENT

There being no further business to come before the Board, Mr.

Gambuti adjourned the meeting at 12:15p.

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EVALUATION OF FORMAT CHANGES FOR COTH SPRING MEETING

The 1989 COTH Spring Meeting incorporated a number of majorchanges from prior meetings:

o a resort hotel was used instead of a downtown businesshotel;

o the program sessions on Thursday and Friday morningwere organized to use plenary speakers followed bydiscussion groups rather than simply speakers followedby Q and A;

o the afternoons on Thursday and Friday were left open toallow free time;

o the member-sponsored reception was moved from Thursdayevening to Friday evening,;

o a Saturday morning session was added (as a replacementfor the open Thursday afternoon);

o an optional orientation session was included onWednesday afternoon; and

o an unstructured spouses/guest continental breakfast wasavailable on Thursday and Friday.

While the 1990 Spring Meeting is already booked at a downtownhotel in Boston, the Boston area offers many sightseeingopportunities that may substitute for the recreational optionsavailable at a resort. Therefore, the Administrative Board isasked to evaluate the format changes incorporated into the 1989meeting and advise staff on the desirability of continuing:

o discussion groups following speakers

o open afternoons on Thursday and Friday

o a Saturday morning session

o the best evening (Thursday/Friday) for the membersponsored reception

o the optional AAMC orientation session.

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SELECTION OF 1991 AND 1992 COTH SPRING

MEETING SITES

The past COTH Spring Meeting sites are listed below.

1978 St. Louis, MO

1979 Kansas City, MO

1980 Denver, CO

1981 Atlanta, GA

1982 Boston, MA

1983 New Orleans, LA

1984 Baltimore, MD

1985 San Francisco, CA

1986 Philadelphia, PA

1987 Dallas, TX1988 New York, NY

1989 San Diego, CA

The 1990 meeting is scheduled for Boston, May 9-11. Though

attendance was relatively low at the recent 1989 meeting in San

Diego, the meeting evoked quite a bit of enthusiasm among the

registrants. The consensus is that it was a successful meeting and

a good turnout for 1990 is anticipated. This is the crucial time,

however, to ensure the success of future meetings, and staff asks

the Board to consider the various options:

TONE OF MEETING

The first attempt at a resort meeting for this group went very well

but on a less than optimal scale. The following questions need to

be considered before future sites can be selected.

1/ Does the enthusiasm for location of the 1989 meeting site

justify placing the COTH SPRING MEETING in resort settings in

the future, and if so, to what degree would the following be

accepted?

o More difficult travel

o Higher rateso Less concentrated meeting schedule

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2/ Would combining the original downtown site format with someleisure activities offset the difficulties listed on theprevious page and be preferable to an actual resort setting?

I.e., organized free time with the option ofo Tailored tour with meal (such as private museum tour

and lunch)o More organized spouse activitieso Appropriate sports/leisure activities (though certain

water activities may not be feasible in Charleston, golfand tennis times could be arranged)

3/ Would alternating the setting be more desirable (1990 wouldbe in a downtown setting [Boston], 1991 could be in a moreresort oriented locale, and 1992 would be downtown again)?

SITE SUGGESTIONS

Resorts

ARIZONA BILTMORE, Phoenix, AZ - 15 minutes from Phoenix Airport,onsite swimming, golf, and tennis. Frank Lloyd Wright school ofarchitecture, oasis setting in desert community. Good meetingfacilities, high rates. (May warm)

BILTMORE HOTEL, Coral Gables, FL - 15 minutes from MiamiInternational Airport, close to shopping area and beaches, onsiteswimming, golf, and tennis. Good meeting facilities and reasonablerates. (May warm+)

THE BREAKERS, Palm Beach, FL - 15 minutes from Palm Beach Airportwith connections from Miami and Orlando. Old world luxury hotel(this hotel has an evening dress code) with excellent socialprograms as well as onsite golf, tennis, swimming, and other wateractivities. In proximity of famous Worth Avenue shopping area.Good meeting facilities, high rates. (May warm)

BROADMOOR HOTEL, Colorado Springs, CO - 15 minutes from airportwith connections from Denver, minutes from local sites, onsiteswimming, golf, tennis, and shopping. Good meeting facilities,higher rates. (May cool)

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THE DON CESAR, St. Petersburg, FL - 20-25 minutes from Tampa

International Airport, onsite tennis, swimming, sailing, and other

water activities, golf arranged; similar setting to the Hotel del

Coronado. Driving distance to Busch Gardens, Cypress Gardens, and

1-1/2 hour from Disney World. Good meeting facilities, comparable

rates. (May warm)

THE GROVE PARK INN, Asheville, NC Good connections through

Charlotte and Raleigh. Grand hotel in scenic Blue Ridge area with

onsite golf, tennis, and swimming. In vicinity of historic

Biltmore Estate with chateau and vineries. Good meeting

facilities, good rates. (May cool)

Cities

CHARLESTON. Good hotels in historic setting (Omni Charleston and

Mill House) within minutes of airport. Interesting city with

opportunities for sightseeing, tours, shopping, and limited sports

activities. Travel would most always require changing planes in

Atlanta, Charlotte, or Raleigh-Durham. Good meeting facilities,

good rates. (May warm)

CHICAGO. Good-excellent hotels in cosmopolitan but much frequented

city. Major airport. Convention city with opportunities for

sightseeing, shopping, museum tours, baseball games; little sports

activities. Excellent travel accessibility, moderate to high

rates. (May cool)

DENVER. Good hotels (Brown Palace, Marriott) within 15 minutes of

airport. Business city with historic atmosphere of the old

frontier and gold rush days; opportunities for sightseeing, tours,

and limited sports. Good travel, good rates. (May cool)

NEW ORLEANS. Good-excellent hotels (Hilton, Meridien, Doubletree,

Fairmont) approximately 20 minutes of airport. Unique city with

many sightseeing and tourist attractions, tours, riverboat rides,

shopping, and limited sports. Travel would most always require

changing planes in Atlanta. Good meeting facilities, good rates.

(May warm)

Staff would appreciate the Board considering these options and

offering suggestions for the selection of 1991 and 1992 COTH SPRING

MEETING sites.



FOLLOW UP TO BREAKOUT SESSIONS1989 COTH SPRING MEETING

Background

At the 1989 Spring Meeting, the Thursday and Friday sessionsopened with staff reports (Drs. Petersdorf and Knapp, respec-tively) followed by two theme speakers and breakout sessions formembers to discuss and react to the presentations. The Thursdaymorning program on "Patient Assessment" was stimulating andexciting for most members. The Friday morning program on "TheNon-College Labor Market" was less stimulating and not as wellreceived. In the breakout sessions, members were asked to shareideas about the topics at both the hospital and RAMC levels.This report summarizes the suggestions made for AAMC responses tothe topics presented. Board members are asked to review andevaluate options for consideration as the AAMC Strategic Plan isrevised.

Patient Assessment

Each of the breakout groups had a stimulating discussion ofthe Wennberg/Greenfield presentations. Based on feedback fromdiscussion leaders and staff, the following common ideas weresuggested for further AAMC consideration:

o The AAMC should support a policy position which advocatesorganizing patient assessment/outcome research as asignificant mission of academic medical institutions:

patient assessment research should be acollaborative effort of the medical school andhospital undertaken to change the culture ofclinical medicine. Integrated hospital/schoolprograms may overcome constraints of school tenurepolicies which often reward projects withmultiple, early publications rather than long-termprojects

current payment incentives for hospital servicesemphasize high occupancy and operating profits.These may be inconsistent in the short run withhospital sponsorship/support of research to reduceinappropriate admissions and ancillary services

unless academic institutions provide leadership inthe public domain, developments will be providedby private entrepreneurs unwilling to share andtest clinical logic

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o The AAMC should develop a series of conferences to addressmajor issues in the area of patient assessment/outcomemeasurement:

a joint COD, CAS, COTH, OSR conference could bedeveloped to help ensure that all components ofthe membership are aware of and supportive ofdevelopments

a conference of researchers and institutionalleaders could explore and evaluate appropriateorganizational arrangements for funding andmanaging major patient assessment projects

a conference of COTH hospitals actively involvedin one or more aspects of patient care assessmentcould foster multi-institutional efforts andmutual education

a conference of COTH hospitals could be held todiscuss options for the administrativeorganization of patient assessment activities inlight of the fact that most approaches involvemultiple administrative databases plus an ongoingrelationship with the clinical leadership

a conference could be cosponsored with otherorganizations to explore how assessment activitiesshould advance from detailed evaluations of singleprocedures to more global assessments ofphysicians' cognitive styles

o The AAMC should prepare a primer or annotated bibliographyon patient assessment/outcome measures/clinical parameterswhich provides all members with an awareness of theconceptual and methodological characteristics of thedeveloping field.

o AAMC and its members should recognize that it isunreasonable to expect patient assessment and financingdecisions to be kept independent.

o AAMC should foster efforts to bring awareness of patientassessment and quality evaluation to the undergraduatecurriculum as a critical step in life-long learning skills.

Non-College Labor Market

This topic is more global than the prior day's session andthe speakers were less stimulating. Nevertheless, a number ofcommon themes emerged from the discussion groups:

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Labor markets for non-college youth are primarily local andthe options for the AAMC are limited:

AAMC should work with the educational and careerassociations and unions to promote careers in thehealth services sector

AAMC could catalog individual member efforts todevelop new sources of and approaches to the non-college labor market to distribute the report toall members

AAMC could develop a statement for schoolcounselors on teaching hospital needs for non-college youth emphasizing required competenciesand attitudes

o AAMC should help member hospitals understand the hospital isbecoming a major educational institution for entry levelcareers and promotions.

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SEPTEMBER BOARD BREAKFAST SPEAKER

The DRG classification system which is the backbone of

Medicare's prospective payment system is presently being revised

and expanded to about 1,250 categories. If the new classifica-

tion system is considered for adoption, several other components

of the system will also be opened for discussion: outliers,

indirect medical education payments, and disproportionate share

payments. To provide the COTH Administrative Board with a

briefing on the proposed DRGs and their impact on the structure

of the Medicare payment system, staff proposed that the Admini-

strative Board meet with Richard Averill, President of HSI of New

Haven, Connecticut at its September breakfast. The Board is

requested to approve/disapprove this suggestion.

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PROJECTED 1989 COTH PROGRAMAAMC ANNUAL MEETING

Monday, October 30, 1989

I. Luncheon of Membership

Business Meeting

A. AAMC President's ReportRobert G. Petersdorf, M.D.

B. Chairman's ReportGary Gambuti

C. Staff ReportJames Bentley

D. Nominating Committee ReportJ. Robert Buchanan, M.D., Chair

COTH Program Session

The Canadian Healthcare System: Implications for COTHHospitalsPresiding: Raymond G. Schultze, M.D.

A Canadian Hospital's Experience: A CEO's PerspectiveW. Vickery Stoughton

A Former Canadian Chairman's PerspectiveGerard N. Burrow, M.D.

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MEMORANDUM #89-38

May 25, 1989

TO: Council of Teaching HospitalsCouncil of DeansCouncil of Academic Societies

FROM: Robert G. Petersdorf, M.D., President

SUBJECT: Proposed Medicare PPS Regulations

On May 8, the Health Care Financing Administration published proposedregulations for the Medicare prospective payment system (Federal Register,

pp. 19636-19796). The proposed changes, which would take effect on October 1,

1989 focus on seven major areas:

Per Case Payment Amounts (pp. 19660-19665, 19740-19749)

Despite budget proposals to the contrary, current law specifies that DRG

payment rates for the next Federal fiscal year will be increased by the full

change in the hospital market basket. Therefore, HCFA proposes to increase

the national, adjusted standardized amounts by the full 5.8% market basket

increase. When this increase is combined with other proposed changes

described below, HCFA estimates the total change in PPS per case payments

(including basic per case payments, outliers, disproportionate share payments,

and indirect medical education payments) will be as follows:

Expected Per Case Payment Percent

Type of Hospital FY 1989 FY 1990 Change

All hospitals $4,578 $4,762 4.0%

Rural Hospitals 2,957 3,072 3.9

Small Urban(1,000,000 or fewer) 4,571 4,763 4.2

Large Urban(above 1,000,0000) 5,498 5,714 3.9

Teaching (less than0.25 residents per bed) 5,068 5,274 4.0

Major Teaching (above0.25 residents per bed) 7,552 7,872 4.2

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The substantial differences in per case amounts for different types ofhospitals reflect the impacts of differences in case mix, area wage indices,outlier payments, disproportionate share payments and indirect medicaleducation payments.

Revision of the Hospital Wage Indices (pp. 19646-19648)

The current wage indices used to adjust PPS payments are based on an averagingof 1982 and 1984 wage data. HCFA proposes to use only 1984 data. Thisintroduces a major change in index values for many communities, and COTHmembers should compare their current and proposed index values to appreciatethe impact of the proposal.

Outlier Payments (pp. 19661-19662)

HCFA proposes to retain outlier payments at 5.1% of total PPS payments. Tomeet this goal outlier thresholds are increased as follows:

Type of Outlier Current Threshold

Day Outlier

Cost Outlier

geometric mean plusthe lesser of 24 daysor 3.0 standard deviations

the greater of twice thePPS rate for theDRG or $28,000

By raising the thresholds for defining outliers,and paid as outliers.

Recalibration of DRG Weights (pp. 19644-19646)

Proposed Threshold

geometric mean plus thelesser of 27 days or3.0 standard deviations

the greater of twicethe PPS rate for theDRG or $32,000

fewer cases will be defined

HCFA proposed to reweight all DRGs using data on 9.5 million patientsdischarged during FY 1988 and using the same methodology HCFA used last year.

Burn Outliers (pp. 19648-19649)

HCFA proposes to reduce the percentage used to compute day outlier paymentsfrom 90% to 60% while retaining the 90% adjustment for cost outliers.

Indirect Medical Education and Disproportionate Share Adjustments (pp 19654-19655)

In last year's reconciliation act, (P.L. 100-647), Congress extended thedisproportionate share adjustment until October 1, 1995. HCFA proposes tomake the necessary technical provisions required to ensure that thedisproportionate share and indirect adjustments are extended in their currentform until 1995.

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Changes in DRG Classification (pp. 19637-19644)

HCFA proposed significant changes in the current DRG system including revisingthe surgical hierarchies and their list of complications and comorbiditiesused to classify patients. A number of changes in the ICD-9CM coding systemare also proposed.

Discussion

Having proposed these changes, HCFA concludes by reporting (p. 19749), "thenet effect of all changes would be to increase payment to rural hospitals by3.9 percent, to large urban (area) hospitals by 3.9 percent and to other urban(area) hospitals by 4.2%. The net effect of all changes in the proposed rule,including the current law update, is a differential impact that is theopposite of the impact that would be appropriate based on the analysis ofMedicare operating margins. Implementation of a higher update rate for ruralhospitals and for large urban (area) hospitals would reverse this effect."(Emphasis added). Thus, HCFA appears to be urging Congress to revise presentPPS law.

Comments on the proposed regulation should be provided to HCFA by July 7 to:

Health Care Financing AdministrationDepartment of Health and Human ServicesAttention: BERC-630-PP.O. Box 26676Baltimore, Maryland 21207

An extended comment period, until September 30, is provided for comments onfuture wage surveys and on volume adjustments for sole community hospitals.

For additional information, please contact James D. Bentley, Ph.D., Division

of Clinical Services, (202) 828-0490.



MEMORANDUM #89-27

April 4, 1989

TO: Council of DeansCouncil of Teaching HospitalsCouncil of Academic Societies

FROM: Robert G. Petersdorf, M.D., President

SUBJECT: Final Comments on Medicare Proposed Rules on Payment for PhysicianServices Furnished in Teaching Settings

******************************************************************************ABSTRACT

* This memorandum is a summary of the Association's official comments to* HCFA on the proposed rules on payment for physician services furnished* in teaching settings, issued February 7 (54 Federal Register 5946-5971).* All members are urged to submit comment letters to HCFA before the* 5:00 p.m. deadline on Monday, April 10. Since time is short, we advise* you to express mail all letters to assure timely delivery to HCFA,* Department of Health and Human Services, P.O. Box 26676, Baltimore,* Maryland 21207. A copy of your comments to HCFA should also be forwarded ** to: G. Robert D'Antuono, Staff Associate, Division of Clinical Services,* AAMC, 1 Dupont Circle, NW, Suite 200, Washington, D.C. 20036.******************************************************************************

The AAMC comments to HCFA on the proposed rules, "Payment for PhysicianServices Furnished in Teaching Settings," emphasize three major issues andseveral other issues:

I. MAJOR ISSUES

A. Definition of a Teaching Physician.

The definition of a teaching physician, as delineated in Section 415.200(a) on page 5963, is too broadly stated and vague:

"Teaching physician means a physician who is compensated by a hospital,medical school, other affiliated entity, or professional practice planfor physician services furnished to patients, and who generally involvesinterns or residents in patient care."

The terms "other affiliated entities" and "professional practice plan" are notdefined. Therefore, it is not clear which physician practice groups areincluded and which are excluded by the definition. The AAMC recommends that

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HCFA develop a "bright-line" definition distinguishing clearly the physicans defined as "teaching physicians".

B. Offset of Practice Plan Income

As explained in the preamble and in the regulations themselves, HCFA isproposing, under some circumstances, to reduce allowable hospital costs forphysician services furnished to providers "if any part of the payment aphysician receives for physician services furnished to individual patients isdirectly or indirectly returned to or retained by the provider or a relatedorganization under a formal or informal agreement." The AAMC strongly opposesthis proposed change in HCFA policy because it:

o is inconsistent with Congressional action replacing cost-basedpayments for teaching physicians with charge-based payments;

o in effect, imposes compensation related charges on hospitals andphysicians who did not elect this option when provided the choice;

o violates the separation between trust funds by using Part B trustfunds to support Part A activities;

o expands the concept of the costs of related organizations into thearea of revenues of related organizations;

o is inconsistent with Medicare's current policy of not offsettinggifts and income from endowments;

o treats various medical center arrangements differently basedsolely on their legal structure, and

o sets in place a policy which will diminish the incentive forphysicians to assist their medical school or teaching hospital.

The AAMC strongly recommends that the disposition of a properly earned Part Bfee should not affect either the amount of the fee or the costs incurred by ateaching hospital.

C. Payments to Physicians Not Using Interns and Residents

Under Section 948, Congress limited reasonable charge-based fees tophysicians practicing in hospitals where at least 25% of the non-Medicarepatients paid at least 50% of their charges. The underlying policy is thatMedicare will pay reasonable charges where other patients are paying on thesame or similar basis. If the patients are not paying above this threshold,compensation- related charges are imposed. The AAMC strongly recommends thatwhere a physician in a teaching hospital does not involve residents in the care of patient. the physician should be paid using the general reasonable charge rules.

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II. Other Issues

A. Personally Provided Physician Services (Section 415.170)

Intermediary Letter No. 70-7, published in January, 1970 states (in theresponse to question four) that "a physician qualifies for Part B payment onlyif he performs either: (1) activities set forth in IL372 as necessary toqualify as an "attending physician," or (2) "persona]. identifiable medical services" (emphasis added). The February 7 regulations discuss extensivelycondition one: providing services under the attending physician provisions.The Association requests HCFA to confirm that it still intends to pay on areasonable charge basis for services personally provided by the physician.

B. Distinct Segment of Care (Section 415.174).

The February 7 proposed rule states a physician may qualify as apatient's attending physician if the services provided constitute a distinctsegment of the patient's course of treatment and are long enough to requirethe physician to assume a substantial responsibility for the continuity of thepatient's care. The Association recommends that HCFA permit a physician to attain "attending physician" status when the physician's responsibility for patients changes as a result of a formal, scheduled transfer of attendingphysician responsibilities.

C. Supervision Costs

Section 415.50 (a) (5) states, with respect to allowable cost a providerincurs for services of physicians, that "the costs do not include supervisionof interns and residents unless the provider elects reasonable costreimbursement as specified in Section 415.160." The AAMC notes that thisrule is stated in the regulatory context of cost reimbursement elected for allphysician services. Some reviewers, however, are interpreting this to meanthat HCFA will disallow all supervision costs in all hospitals. The AAMC'sinterpretation is that this rule will not effect supervision costs under theper resident payments specified by the COBRA provisions for direct medicaleducation costs. The Association requests verification of our interpretationof this section.

D. Presumptive Tests

The proposed regulation involves two statistical tests for physicianfees. The first seeks to determine whether non-Medicare patients generallypay physician fees for personal medical services in the hospital. Under thelaw, Medicare fees are paid on a reasonable charge basis when 25% of the non-Medicare patients pay at least 50% of their billed physician fees. The secondstatistical test is required by the special customary charge rules. Under theproposed rules teaching physicians are paid at the greatest of: 1) thecharges most frequently collected in all or substantial part, 2) the mean ofcharges that are collected in full or substantial part, or 3) 85% of theprevailing charge. The billing entity has the opportunity to provide evidencesupporting a customary charge greater than the 85% of the prevailing. Forboth statistical tests. the AAMC recommended that a simple. low cost method

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based on payer mix be devised for compliance.

E. The 90% Cap on Customary Charges

When the law establishing the special customary charge rules forteaching physicians was amended in 1984, the minimum payment of 85% of theMedicare prevailing was raised to 90% if all physicians accepted assignment.While this was enacted to provide an inducement to accept assignment, it mayhave the opposite effect. The AAMC wishes to work with HCFA to submit a legislative proposal Drovidine that where all physicians in a teachinghospital accept assigpments. fees would be paid at no less than 90% ofprevailing charge.

F. Reasonable Compensation Equivalent Limits.

The Association recommends that HCFA continue to review, calculate andpublish the reasonable compensation equivalent (RCE) limits on an annualbasis.

G. Anesthesiology Attending Physician Requirements

The AAMC supports the proposal to limit charge payment to the medicaldirection of no more than two concurrent cases when residents or interns areinvolved.

H. Outpatient Services

The Association welcomes these changes and regards the new criteria asessential in promoting the development of ambulatory care services in teachinghospitals.

A copy of the Association's complete letter is available from the AAMCDivision of Clinical Services. Also, should you require clarification ofcomments made by the Association, please contact Jim Bentley, Ph.D. or RobertD'Antuono, Division of Clinical Services at 202-828-0490.

Thank you.

CC: AAHC MembersGroup on Faculty PracticeGroup on Business Affairs (Principal Financial Officers)Government Relations Representatives

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ASSGELACION OF ONE DUPQNI' CIRCLE, NWAMERICAN WASHINGTON,BE 20036MEDICAL COLLEGES TFIRPHONE (209)828.0400

April 19, 1989

Mr. Thomas Gentile, Jr.Assistant AdministratorMedical Affairs

Providence Hospital16001 Nine Mile RoadSouthfield, Michigan 48075

Dear Tom:

I am sorry that one component of the Associations's recentMedicare testimony -- the data on the impact of reducing theindirect medical education adjustment -- was perceived by someAHME members as an AAMC preoccupation with academic medicalcenters. The perception that may have been created was not ourintention. Therefore, I appreciate your telephone call andwelcome this opportunity to respond.

The testimony you heard, attachment A, has twenty-five pages oftext. The first sixteen pages plus the final four pages discussMedicare policies on the indirect adjustment and the directpayments as they apply to all hospitals. You will note on page11 our illustration discussed hospitals with resident-to-bedratios of 0.05, 0.25 and 0.50. Only the data section focuses onacademic medical center hospitals.

The emphasis on academic medical center hospitals in the dataanalysis resulted from the availability of accurate data, notfrom an intention to be exclusive. As we discussed, from 1965-1985 the AAMC conducted a special data collection and analysisactivity for university-owned hospitals. In August 1986, TheCommonwealth Fund gave the AAMC a grant to develop a database anddata analysis capability on teaching hospitals. We originallytried to build the project around public use tapes from Medicarecost reports. Our effort was unsuccessful because HCFA's data isso poor. For example, the HCFA tapes show five hospitals withmore than 75,000 residents each. The tapes also show that 22% ofthe hospitals reporting residents in training claimed no directmedical education payments from Medicare. Faced with thisproblem of terrible data, we decided that a special COTH databasewas needed.

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Mr. Thomas Gentile, Jr.Page 2April 19, 1989

To start the database, we needed to select a manageable subset of

COTH members. I decided to take the set of university-ownedhospitals, with whom we had previous experience, and addfreestanding academic medical center hospitals. Our originalplan envisioned the following data schedule:

1988 -- collect and report academic medical centerhospitals,

1989 -- add all non-Federal COTH members with 100 or moreresidents,

1990 -- add all remaining COTH members.

We have not been able to maintain our original plan because the

submitted data have taken too much time to edit and correct.

Therefore, our database plan has been revised in two ways:

1) We have moved the questions on number of housestaff and

source of stipend support to the 1989 housestaffstipend survey. This allows us to collect someessential data on all COTH members.

2) We have slowed down the survey schedule to addadditional hospitals only when we can promptly publish

results on the current groups. If the processing ofmedical center data continues to go well, we hope to

add COTH members with more than 100 residents to the

survey this fall.

As you meet with your committee, I hope you will share six

additional facts with them:

1) The current COTH Chairman is Gary Gambuti, president of

St. Luke's/Roosevelt Hospital. This is an affiliated

community hospital.

2) When the COTH Nominating Committee reported last year,

they included Sister Sheila Lyne from Mercy Catholic

Hospital and Medical Center in Chicago as a Board

nominee. The Nominating Committee also balanced AAMCAssembly nominees between medical centers, affiliatedcommunity hospitals and the VA.

3) Our committee on paying physicians in the teaching

hospital included Bruce Steinhauer from Henry Ford and

Stephen Wang from Morristown Memorial. Our comment

letter, copy enclosed, specifically addressed concerns

of affiliated community hospitals.

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Mr. Thomas Gentile, Jr.Page 3April 19, 1989

4 Donna and I have worked together personally to scheduleAHME programs at the AAMC Annual Meeting at times thatwill allow all COTH members to attend.

5) The meeting topics selected for the 1989 COTH SpringMeeting, program enclosed, were designed to appeal toall COTH members, be they medical centers, affiliatedhospitals, or VA hospitals.

6) The charge to the AAMC Committee on Governance andStructure includes reviewing "the means through whichthe Association might involve individuals with specificinstitutional educational responsibilities such ashospital directors of medical education . . ."(emphasis added).

The AAMC, as a whole, and the Division of Clinical Services, inparticular, are committed to serving and supporting all COTHmembers. Thus, I would welcome a formal liaison between an AHMErepresentative and myself and the opportunity to attendappropriate ANNE meetings. On the latter point, I'm sorry Icouldn't accept your invitation to attend the April 28 - May 3meeting due to prior commitments.

I welcome the openness your telephone call represents. If we aredoing something that offends any part of our hospital membership,I would like to know it. I welcome calls from you and yourcolleagues.

JDB/mrl

Enclosures

cc: Robert G. Petersdorf, M.D.John F. Sherman, Ph.D.Richard M. Knapp, Ph.D.

Sincerely,

James D. Bentley, Ph.D.Vice President forClinical Services

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